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Why invest in platform technologies? Analysis from Deepbridge Capital

Medical technology innovation has become a significant focus for venture capital investment in the last ten years. The ageing population combined with the opportunity to develop solutions that can be applied globally is driving a spike in medical technology investment.

One company actively investing in “MedTech” is Deepbridge Capital.  Head of Marketing, Andrew Aldridge(pictured), outlines that the lucrative opportunities may lie in the sweet spot where medicine and technology meet.

Deepbridge Capital looks at three factors to identify the right companies for investment. Our primary focus is on whether innovation solves real commercial need. The second is whether the technology is protected by robust IP.  The third is the people involved: their drive is what makes a company successful.

New frontiers

Deepbridge’s portfolio has always included medtech opportunities thanks to their team’s experience and the company’s interest in supporting the vitally important issue of global healthcare provision.

One of our first investments was Sky Medical Technology.  This company had developed a technology called OnPulse™ and was looking for funds to make this into a wearable, medical grade device.  The initial challenge was turning the technology into a product.  The result has been the geko™ device – a wearable medical device that helps address a multitude of medical disorders, from complications related to swelling after surgery, to the closure of hard-to-heal wounds, to the prevention of life-threatening blood clots. The device is applied at the knee and works by sending a small electrical pulse down the lower leg to increase blood circulation. It is an easily understood, proprietary mechanism, well protected by a large family of separate patents, that translates to multiple separate therapy areas.

One technology, multiple applications

The ‘one technology, multiple applications’ approach was one of the important aspects of Deepbridge’s investment in Sky Medical.  We describe this as ‘platform technology’ – one technology that can be applied to multiple medical applications.  Multiple potential vertical markets mean multiple routes to revenue, as well as possible multiple routes to exit.

Another platform MedTech company we invest in is Zilico – a cancer diagnostic company that uses Electrical Impedance Spectroscopy (EIS) to detect potentially cancerous cells.  Initially deployed to diagnose cervical cancer and pre-cancerous tissues, the technology is equally able to diagnose other cancers. Having multiple routes to market – a clear prioritisation of markets based on solid economic arguments – is particularly powerful in attracting investment and support.

Combining technology and life sciences funds under one investment company gives us the ability to take a balanced view of exit timescales.  Some investments, such as digital health apps, are unlikely to need significant funding and realise a return relatively quickly.  MedTech devices that are adopted by healthcare systems can take longer to realise, because devices need to be fully regulated for medical purposes. We tend to diversify our portfolio across multiple industries and companies. Typically, the longer the runway, the greater the potential return that can be realised and this is particularly true of MedTech platform technologies.

 

 

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